The Impact of General Rate Increases (GRI) on Logistics
Businesses around the world are facing macroeconomic challenges, and the latest concerns have to do with general rate increases from ocean freight carriers, with Trans-Pacific carriers announcing a general rate increase on April 15th that applies to all US and Canadian ports.
Although the TP trade has passed the bottom of the market, the GRI on April 15th only got moderate success. Carriers originally implemented a GRI of $600 - $800 per FEU, but after a few weeks of volatility, it finally settled around $300 - $400 per FEU.
The spot rate may continue falling in the 1st half of May due to work stoppages during the Labor Day holiday, especially for shipments to USEC, as ocean freight space remains open no matter how much capacity was taken offline, with many carriers still asking for support.
Why Are Shipping Rates Increasing?
We believe that the higher rates were more a result of liner operators’ better capacity management and blank sailing plan rather than a real rebound in volumes. According to the booking forecast from suppliers in China, the orders in May are still slow and not strong.
US retailers are also forecasting that imports will be down on a year-on-year basis until at least August. Unless volume levels pick up substantially or more sailings are tactically readjusted or removed, any GRI attempts are unlikely to work for carriers.
Will Rates Increase Again In May?
MSC, CMA, EMC, and HPL have all confirmed no further rate action before the 15th of May for deliveries to USWC/USEC/GULF.
How To Manage General Rate Increases As a Business?
Businesses shipping products from Asia or India into North America are largely at the mercy of freight carriers when it comes to general rate increases. The best way to manage the additional costs is by optimizing other aspects of the logistics process to avoid delays and unnecessary expenses.
At Overseas Container Logistics, we provide a reliable option for businesses sourcing products from Asia and India. Our ocean, air, and trucking freight forwarding services can affordably deliver your products to any location in the world. Contact us today to get started.
Overseas Container Logistics (OCL) is a 3PL commercial freight-forwarding company based in Richmond, British Columbia.
If you have any questions about this article or would like to talk to us about your transportation and freight needs, give us a call at 604-774-8177.